Dave Eagle

Posted on May 8, 2017

7 steps to great restaurant inventory management and tracking

Cafe and restaurant inventory management: these are words that have never excited anyone. It doesn’t […]

Cafe and restaurant inventory management: these are words that have never excited anyone. It doesn’t matter if you say the words on their own, or all together. No one’s eyes get wide with anticipation at the sound of them.

But here we are, and that’s because there is one interesting thing about cafe and restaurant inventory management you should know. If you ignore it, the consequences for your business can be pretty dire. This is especially true for hospitality, where consistency of the product is crucial. If you’re consistently out of ingredients, making substitutions, or just scratching items from the menu entirely, your customers will notice. And then they’ll cease to be customers.

All of a sudden, tracking your inventory properly doesn’t just seem like a boring chore. It’s important, and it can be daunting, but that doesn’t mean it has to be difficult. All you really need to do is develop a thorough protocol, and be religious about following it. I know, I’m not making it sound any sexier. But it has to be done, and if you follow these steps you’ll find that staying on top of your inventory becomes second nature.

1. Prepare your Point of Sale to track your inventory.

This list assumes you’re already running a hospitality-specific Point of Sale with advanced inventory capabilities. Are you not doing that already? You totally should. For the rest of you, this preparation means making sure everything that’s on your menu has been loaded into your Point of Sale.

This is a two-step process, so even if you’re already up and selling with your Point of Sale, keep reading to make sure you’ve done it right.First, you need to enter every single ingredient that goes into your food. You may sell cheeseburgers and milkshakes, but you’re buying beef, cheese, ice cream, and milk (among other things). Define minimum levels of each ingredient, and associate them with your suppliers. When stock gets low, the Point of Sale can alert you to this fact and even generate a purchase order to replenish supplies, ready for you to sign. Adding all the menu items comes second since they’ll be based on recipes using your ingredients. By doing it this way, your Point of Sale can automatically update the quantity of any and all ingredients in whatever meal you sell.

2. Prepare your staff (or yourself) for the inventory routine.

While everyone should at least be made aware of what the procedures and expectations are, you should ensure that one or two people are responsible for it. For best results, you’ll want two people, as that helps to ensure accurate counts. For even better results, make sure it’s two people who aren’t you. There have to be some perks of ownership, right?

In any case, whoever’s handling inventory today should also the one who handles it tomorrow and the next day. The need for consistency extends to the personnel, too: over time, the task will go quicker and smoother if it’s the same team handling it every time.

3. Take stock of your surroundings.

Now, that everything is all set to be counted at the Point of Sale, you’ve got to count them all yourself first. This is the first stocktake of the rest of your life, so you need to hit everything and update it. Never mind if you counted the day before. You’re starting a new regimen here, and it’s best to start from scratch. You’ll be able to perform the stocktake right from your Point of Sale. Count everything that can be counted. Weigh everything that needs to be weighed. Update all the quantities and save the changes.Then, and this is really important, get someone else to do it again. When all your numbers are in agreement, congratulations! You’re done! You never have to count anything again. Until tomorrow.

4. Create a schedule for manual stocktakes—and then follow it.

The idea of a daily, manual stocktake might seem like a waste of time if you’ve got a Point of Sale automatically updating inventory with each sale, but sales don’t tell the whole picture with inventory. Liquids get spilt, leafy greens wilt, meat can spoil, and meals can be sent back by customers. It’s important to check ingredients and verify whether reality conforms to expectation. Besides, your inventory data is important, long past the point where the inventory is consumed. When you stick to your schedule, you’ll have weeks, then months, then years of data to go back and analyse. As for doing the manual stocktakes: perishable items need to be checked daily for quality, so you might as well count them while you’re there. Non-perishable items should be counted once or twice a week, depending on how fast you go through it. You should always do this when you’re closed, and preferably before you open. The important thing is to stick to the schedule as if your business depends on it. You can’t put it off, and it’s not as if you can do it twice the next day to compensate. The more you supply your Point of Sale with regular, reliable data, the better your understanding of your purchases and usage.

5. Record waste (and why it happens)

Any time food gets deducted from your inventory, you should know the reason why. Most of the time, that reason is found in sales reports. But when food doesn’t get sold and still gets taken off the shelf? You need to know that, too. As you do your manual stocktakes, don’t just toss out expired ingredients and update your inventory. Record the waste, and add the reason. The same should be done when something is spilt, or a customer sends something back. Great inventory tracking isn’t just about knowing what you have on hand. When you know what you’ve wasted, you can put dollar signs to those losses and make sense of the impact. When you know why you’ve wasted, you can take measures to prevent it from happening again.

6. Make sure inventory is up to date before taking deliveries.

Anytime you know you’ll be taking deliveries, make sure you’re starting from a freshly verified count. This prevents the possibility of confusion when adding new stock in with what’s already on the shelves.

7. Obsess over your data.

If you follow all these steps, you’re going to find that you’ve got a handle on your business like you never have before. You’ll be able to compare your usage with what you forecast and make adjustments to your purchasing accordingly. You’ll know what’s coming in, what’s on its way out, what was wasted, who wasted it—the list goes on. When you obsess over your data in real time, you’ll have a better idea of how your business operates, of what it costs you, and of ways to save money.

In fact, the whole inventory exercise as a whole gets you closer to your business. The flow of inventory from the delivery door in the back all the way to your customers’ stomachs will become a clear picture, and you’ll be armed with the data to keep it that way. Having good software helps, but you’ve got to commit to doing it. The food in your kitchen is revenue waiting to happen, but it’s also an expense you’ve already paid for. Don’t overlook it.

Check our menu pricing and psychology guide to understand how you can increase margins, and direct customers to your most profitable dishes.